A firm has a marginal cost of $20 and charges a price of $40. The Lerner index for this firm is:
A. 0.33.
B. 0.50.
C. 0.20.
D. 0.75.
Answer: B
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The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Employment will fall by
A) 0 hours. B) 10 million hours per year. C) 20 million hours per year. D) 30 million hours per year.
Coupons represent a form of price discrimination because they offer a low-cost way for firms to
A) identify customers with apparently more elastic demand and offer them a lower price. B) retain loyal customers who are not price sensitive. C) offer discounts to consumers who buy larger quantities. D) perfectly price discriminate.
A $1,000 face value bond, with one year to maturity that sells for $950 and has a $40 annual coupon has a:
A. coupon rate of 4.00% and a current yield that is below this. B. current yield and yield to maturity of 4.00%. C. current yield of 4.21%. D. yield to maturity that equals the current yield.
If elasticity of demand is 1 and elasticity of supply is 0, what percentage of a 10 percent tax will be borne by consumers?
A. 10 percent. B. 50 percent. C. 0 percent. D. 100 percent.